Growing investor interest in alternative proteins has led to the launch of 2 first-of-their-kind Environmental Social and Governance (ESG) reporting frameworks.
The frameworks have been developed by the FAIRR initiative, in collaboration with the Good Food Institute, in response to investors’ desire to measure and analyze the ESG characteristics of alternative protein companies and production lines.
Investments in alternative proteins accelerated
Over the past few years, private investments in alternative proteins have accelerated, increasing by an average 5-year growth rate of 91% through 2021. In every global region, private and public investors are helping to bring innovative alternative protein products to market.
For whom is the framework designed?
The “Diversified Framework” is designed for companies that produce and sell a variety of products including alternative proteins. The framework covers retailers, manufacturers, and animal protein producers.
Insights & expertise provided by:
Among the organizations that provided insights and expertise for the frameworks were representatives from Unilever, Danone, Conagra Brands, European Alliance for Plant-Based Food, Blue Horizon and Dao Foods, China, Eat Just, and WWF UK.
Jeremy Coller, FAIRR: Climate goals
Commenting on the launch, Jeremy Coller, FAIRR Initiative chair, said the frameworks provide investors and companies with a common language and set of standards to measure and disclose how they are managing their ESG impacts and addressing climate goals.
“We expect that FAIRR members, representing $68trillion AUM, will welcome the frameworks as a further tool in their investment process and help facilitate comparability across protein producers as innovation continues in the market.
“We hope to see both large proteins produces in the Coller FAIRR Protein Producer Index and smaller specialized alternative protein companies adopt it, which will benefit the market as a whole.”
The Diversified Framework report’s introduction highlights how alternative proteins, including plant-based, fermentation-enabled and cultivated meat, seafood, eggs and dairy provide a pathway to decarbonizing the world’s protein production system, mitigating environmental impacts while meeting the global demand for protein.
“Making meat from plants and cultivating meat from cells also decreases the risk of antimicrobial-resistant infections and zoonotic disease is driven pandemics, and ultimately feeds a growing global population with fewer resources.”
The FAIRR and GFI principles for effective ESG reporting cover 4 key areas:
- Incorporating medium to long-term risk management – for example, what water-related risk has a company identified in relation to its alternative protein business?
- Tailoring metrics to company capacity – ie, how does the company plan to help workers transition into new climate-friendly jobs as part of its climate strategy? What role will alternative proteins play in this strategy?
- Making ESG more than a score
- Linking ESG disclosure to change to track impact.
The organizations are aware of the reporting burden diversified companies may face, with many reporting to existing voluntary standards, such as the Climate Disclosure Project (CDP) and others. To mitigate this burden, where possible, the Diversified Framework has been streamlined to include a comprehensive but limited number of novel alternative protein industry-specific metrics that can complement a company’s existing reporting.
The framework is divided into 3 pillars (governance, environment, and social), and 9 themes (lobbying, climate, land conversion and deforestation, water management, soil management, nature positive practices, consumer engagement, just transition and nutrition, and health), and 24 sub-themes.